Red candles in the mines: 92% of GDX stocks now sit below the 50-day average

Nearly 92% of stocks in the VanEck Gold Miners ETF (GDX) now trade below their 50-day moving average, with the share above that benchmark dropping from over 90% to 8% in 21 sessions, according to SentimenTrader data. About 90% also trade below their 200-day average, the highest share in 3 months, per The Kobeissi Letter. That reading comes days before Wednesday’s Federal Reserve decision, with traders still pricing a possible rate hike this year.

Gold is trading at $3,983.91, down 3.19% from a month ago, after slipping below $4,000 on Friday for the first time since July.

Operating leverage amplified miners’ gains over the summer, when miners posted a record month: the MSCI global gold miners index jumped 43% in August, while gold gained about 13%. Miners also trade as stocks, so they caught last week’s equity selloff. Newmont fell 3.7% in Australia on Friday as the ASX mining sector dropped 3.74%, Capital Brief reported.

Earlier readings at this extreme were followed by sharp rebounds. The Kobeissi Letter points to similar setups in March 2024 and December 2024, when GDX rallied 21.5% and 15.4%, respectively, over the following month. The late July washout followed the same path, although that rally had a clear trigger in the US Treasury’s buyback plan.

Newmont, the world’s largest gold miner, reported third-quarter all-in sustaining costs (AISC) of $1,454 per ounce. Gold trades about $2,530 above that level. Interest rates still pose a risk, with traders pricing a 75.4% chance of a December hike, per CME FedWatch. Higher rates raise the cost of holding gold, which pays no interest. Wednesday’s decision will offer the first test of whether this washout repeats the July script.